Public Storage profit rises

Business picked up for Glendale-based Public Storage Inc. in the third quarter, and the company is looking to buy more properties to add to the 2,000 self-storage locations it operates in the United States, according to an announcement on Friday.

The company, the largest self-storage firm in the world, increased profit and revenue compared with the same period last year, and saw the number of tenants at its units grow by a total of 15,000.

President and Chief Executive Ronald Havner Jr. said that Public Storage will continue to offer special $1-a-month move-in deals to new customers, but that if trends continue it will restore normal pricing by the middle of 2011.

"We're really trying to set ourselves up next year for a robust level of rate increase for customers and higher occupancy levels," he said.

Public Storage profits grew 1.2 % compared with the third quarter of 2009, from $237.3 million to $239.4 million. Revenue rose 2.6%, from $412 million to nearly $422.8 million.

Costs also increased, Havner said, because of bonuses paid to workers for increasing occupancy rates and because of weather-related repairs and upkeep at sites around the country.

Public Storage bought seven facilities for $27 million in the third quarter of 2010, and has spent $225 million to buy 38 facilities this year, according to Chief Financial Officer John Reyes.

Analysts on the investor call queried officials about whether larger, higher-quality properties are beginning to replace the distressed ones available in the aftermath of the recession.

Reyes said distressed properties continue to dominate, but that more attractive sites are beginning to surface. He said the company expects to remain in acquisition mode.

"The past couple of quarters have seen them put capital to work," Michael Mueller, an analyst with JP Morgan, said in an interview. "It is not too much of a leap of faith to assume the pace is beginning to pick up."

In addition to its domestic business, Public Storage has a 49% interest in a large European storage firm, Shurgard.

Four years ago, Public Storage loaned Shurgard substantial funds in euros, and the value of the loan swings with changes in the currency markets. In the second quarter of 2010, shifts in the currency market caused a $49-million hit to Public Storage's income. This quarter, a reversal spurred $55.5 million in paper gains from the loan.